tv Wall Street Journal Rpt. NBC December 18, 2011 5:30am-6:00am PST
hi, everybody, welcome to the "wall street journal report." i'm maria bartiromo. basketball with mark cuban. why he's concerned about america and america's innovation. what may happen next? he says there's tons of news on the horizon, but be patient. year-end financial cleanup. how to get your financial house in order and get ready for next year. the "wall street journal report" begins right now. this is america's number one financial news program, the "wall street journal report." now, maria bartiromo. take a look what's making
news as we head into a new week on wall street. the cavalry did not come to the rescue as america's stock market had hoped. the federal reserves open market committee celebrated ben bernanke's birthday on tuesday by doing nothing. they had quantitative easing from the fed but the fed did not provide any. the open market committee instead kept interest rates at near zero saying the economy has been expanding moderately, but even with some improvements in the labor market, it's a significant down side risk from europe. that sent the markets down this week for three straight days before rebounding on thursday. the markets, though, were mixed on friday. the euro hit an 11-year low falling below 1.30. concerned about the economies in the eurozone. retail sales are an important indicator of consumer spending, a major driver of economic
growth. and fedex's profits beat estimates. the world's number two packaging delivery system affirmed its guidance, saying a strong shopping season helped its bottom line. not many people predicted what would happen in europe and how it would play out, but my next guest got it right. he's the chief global strategist with tcw and he joins me now. great to have you on my program. >> great to be on your program, maria. >> let's talk about the u.s. we've actually seen some signs of improvement. how are you feeling about the u.s. economy, then i want to turn to europe. >> i think the u.s. economy is better, maria, than the numbers you said in the first half of this year. we have had an improvement in terms of gdp toward the second half. some of the retail sales have been very good, especially black friday soon after thanksgiving. on the other hand, the plane is still flying at relatively low
altitude, which means if you have a major shock in the world, it could bring the plane down. that's my worry. >> which brings me right to europe because that's where the major shocks have been recently. and we're getting bits and pieces of a solution, but we really haven't seen a presen comprehensive solution yet. it feels like death with a thousand cuts. >> it has been death by a thousand cuts, if it's a reference you would like to make. i think we're at the enlightening of this crisis. the first half of 2012, i think, is going to be the end, the low point, and the reason for that is think about july 8. that is the day italian debt came under pressure and it hasn't let up yet. late last week, italian debt was still trading at about 6.5%, and now french debt at the end of last week was trading at 110
basis points over germany. both of that combined with the likely downgrade of france is going to mean all hell is going to break loose. i would say the end is coming, but the valuation, maria, is still not good enough. >> so the first six months of the year, you see all of this really peaking and playing out. so far people have said they believe that the euro stays together. but do you expect in the next several months we see some of the weaker players forced out of the euro like a finland, like a greece, perhaps portugal? >> i think increasingly now -- that's the change in my position. over the last two to three weeks, i've started to think that the eurozone as we know it is going to fall apart. you asked about countries being pushed out. i don't know whether it's the weakest which are forced to leave, for example, greece, or the strongest which decide to leave, example, germany.
because you may have to have a big money creation by the european central bank, and if the germans don't like it, for instance, they just have to quit. >> the markets, of course, were disappointed when we heard the commentary from the federal reserve giving no signal of any additional stimulus, saying we continue to face risks because of europe. >> exactly. >> are you expecting any stimulus from the fed? there is a great debate on whether or not we will see qe-3 at some point. >> i'm looking for a qe-3 in the first half of next year for two reasons. there will be a returning war of federal members federal reserve open markets. some of the hawks are going to go away and some of the doves are coming in effective january 1st. so ben bernanke and head of the new york fed will have more company. so they'll be able to carry to
qe-3. second, if europe listens like i anticipate, that's going to be the ammunition for the fed chairman to see we see a bigger risk for the u.s. economy, therefore, i have to ease further. >> with all of this, how do you want to be divested? give me an example of a diversified portfolio. >> you want to be part of the barbell. one part of the barbell is very safe. despite the fact on friday we were less than 190 on the friday ten-year yield, we are probably going to 150. your investors will make some money there in the next six weeks or so. similarly, with the germans, more money is going in, bank deposits are being emptied in greece, for example, and they're going to put the money into german bonds.
at the other end, i talked about eye risk, betting on the euro weakening, betting on equities going down further which can allow your investors to benefit from that. so rather than be balanced, you're going to be at two extremes, very safe and some very risky investments. >> right, right. >> when the bottom falls apart on europe, you want to become more balanced firstly, and execute your u.s. treasury positions and you'll go more into debt by equity and maybe greece has a good price. >> we have to wait for more good prices to come after some volatility and decline. it was great having you on the program. >> thank you very much. >> we appreciate it. up next on the wall street journal, the former owner of the dallas mavericks. his game plan for winning the sport of business. strategies you should use before december 31st to boost your bottom line and pay less.
we'll take a break and look at the stock market end of week, and we'll be right back with the "wall street journal report." ♪ ♪ ♪ [ male announcer ] some people just know how to build things well. give you and your loved ones an expertly engineered mercedes-benz... ho ho ho! ...at the winter event going on now. but hurry -- the offer ends january 3rd. [ male announcer ] this december, we're thanking our customers
or meatball marinara. just $2 each! just 2 bucks! are you kidding me? there's no competition. male announcer ] prices and participation may vary. subway. eat fresh. from building software companies to filling basketball ross teters rosters, my next guess find sporting business to be a financial affair. author of the new e-book, "how to win at the sport of business." mark, good to have out program. welcome. >> thanks, maria. >> so professional basketball returns to christmas day, the dallas mavericks raising their championship banner. how do you feel about short season? >> i'm just glad to be back playing basketball, and every time i hear you say nba champ, i still get goosebumps. i'm really excited and to be able to raise the banner in front of the heat, that's even better.
>> how fantastic. i bet you get goosebumps. congrats. this is your first book. you write a lot about competition in customer service. tell us what you've learned from sitting in the sport of business. >> what i've learned is that business is the ultimate sport. i talk to professional athletes, obviously, and deal with them all the time, and they talk about the grind of playing 82 games, 48 minutes per game, practicing a couple hours per day. they don't realize that business is a sport that's played 24 hours a day, seven days a week every day forever. you've got to always be on top of your game. so in my book, "how to win at the sport of business," i talk about some methods and tricks i've learned along the way that kept me motivated and going along the way with different types of companies. >> tell me about the e-books. the e-book sales every year, why
did you choose this over publishing? >> to be honest, the most valuable asset of my time and in looking at different deals with publice publishers, they all offered me significant advances, but you have to go on the book tours and it's a real grind and i just didn't have time to do that. that was one problem. the second problem is you have to get everything done way ahead in advance so it can go to the publisher and all that. this was an e-book, and i finished it three hours before it was due and then i made a last-minute change on some pictures before we turned it in. i turned in my pictures and it was up on amazon and itunes and all about three minutes later. >> we had a big year with linkedin, groupon.
do you think technology is in the middle of a bubble? >> in terms of public markets, absolutely not. back in the internet bubble back in the late '90s, everywhere you went, people talked about stocks. you talk to taxi drivers, you would be in an elevator, and you would hear people talk technology stuff. that's not the case today. part two of that where i think there may be a bubble is in the silicon valley. silicon valley has created a situation among venture capitalists where they want to go in big and exit big, and that might create problems for them. what's happening is they're going into small companies with big ideas and putting in 20, 30, $40 million hoping that they'll be able to take them public at some point. i think 90% of those companies will never go public and that's going to create extra problems for those vps that go in. part of it, you could say, is that the price points of investments that are happening for technology companies are dropping like a rock. literally, maria, i'm investing
in at least one new technology company every two weeks, but i'm putting in 100, $250,000, maybe $700,000 at the high end, and their valuation is in the $750,000 range to $3 million range because it takes so little money to start up a technology company these days. >> somebody said to me the other day, and this is an executive in the tech sector. he said to me, look, we are in a bubble, and it's going to continue until facebook goes public. then when facebook goes public, it will burst. are you going to invest in facebook? >> it depends on the price point. i mean, look, going back all those years when you and i first met in the late '90s, people looked at amazon and said, it's a bubble. now amazon pretty much controls the retail universe. if facebook can continue to be the home page for our lives, then they have a chance to succe succeed. they're the first advertising play that really has personalized information and can deliver personalized ads that
exist on the internet. if they're smart and they can keep levering up and expanding their services, then it won't be a bubble and they can continue to grow. the challenge is are they going to be able to continue to execute like amazon has. >> a lot of ceos i speak with are frustrated with uncertainty, government regulation, tax policy probably going to be changed. how y are you feeling in terms the environment right now? >> those are great talking points, but the reality is you just have to run your business. for all the businesses i'm invested in, i worry more about competition, i worry about efficiency, i worry about the product road map a whole lot more than i worry about what the government sdois doing, about t policy, about any other things i can't control. >> in the book you talk about competition and how to win at the sport of business. how much of a setback for you was the nba lockout and what did you do about it?
how do you compete when you can't even control the things happening around you in an industry? >> that's a great question. it was difficult. it was difficult for our fans, particularly coming off a championship, but we had to really work hard to communicate and stay in touch with our fans, and it was a great exercise. it's forced us to communicate and have special events, it forced us to leverage all the different assets we had, whether it was digital assets and replays of the championship run, whether it was meet and greets with our chantraining staff bec we didn't have players available, we had fantasy camps for our season ticket holders. we pulled out every stop we could, and now that we're back it's paying off in dividends. sales are phenomenal right now. >> will we see you with another team? a hockey team or the dodgers, maybe? >> i look at the dodgers and see where it's at. you just have to be careful. before i owned a team, i would have thought that using my business acumen -- and i think this applies to every first-time
owner -- you think you can come in and just be smarter than the other owners, but what i learned is it's more of a social trust, it's more of a community ownership, and i think -- i have to take that into consideration when looking at the dodgers, so we'll see what happens. >> mark, great to have you on the program. thanks so much. >> appreciate it, marie a. thank you. >> we will see you soon. mark cuban joining us. up next on the "wall street journal report," making a list and checking it twice, but not the kind you think. the end of year personal
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welcome back. when it comes to estimating your tax bill for 2011, what can you do by december 31st to make sure you can cash in on april 15? federal tax contributor for some end of year advice on boosting your bottom plan. are there changes ahead to the tax law or other things to consider as we approach year end? >> not so much for 2011. 2012 is obviously up in the air. 2011 not the kind of changes we saw -- remember last year toward the end of the year, we were waiting to see what provisions were going to be extended, which ones were going to expire. we're not in that kind of position this year, but people do get confused on when do i accelerate production. it's not a complicated tax year. >> let's talk about the things
we need to do before the 31st of december to make sure we're in the best possible position in terms of lowering our tax bill for 2011. chartable contributions. >> that's a slam dunk, right? you can give cash, checks, securities. that's a great way to go because you can deduct the full market value and no capital gains. you just have to sort of come up with a fair market value, what your stuff would sell for at a thrift store, for example, but that's the easy way to go. clean out your closet. you've got a couple weeks to do so. and you have a deduction. >> updates to your home? >> if you are thinging about making energy-efficient improvements to your home, now would be the time to do so. energy-efficient windows, doors, whatever the case may be. this is a credit 10%. there are dollar caps. a maximum amount is $500. the installation has to be installed by 391st in ord1st in get this break, and you can't
claim it if you claimed it previous years. >> what expires at the end of the year that we need to know about? >> we have the tax c's at the end of the year. you might consider pre-paying college costs in 2012 if you want to take that break. you don't have to be a full-time student, you can be a part-time student, taking a couple classes. we've also got the education expense that's going away. if you're a teacher, instructor, counselor, now would be a good time to load up on books and supplies. and then the optional sales tax deduction is going away as well. this is the deduction in lieu of state and local taxes. if you live in a state where there's no income tax, florida or texas, for example, now might be the time to consider going out and buying a luxury car, a boat so that you can actually maximize the break here and take
that sales tax deduction. >> before the end of the year. >> yeah. >> health care. there are deadlines for money in both savings accounts as well as flexible spending accounts. >> the health savings account if you're anywhere near the contribution limits, you want to ra ratch it up by the end of the year. the flexible account, if there's anything in there the end of the year, it has to be used up or that money is gone. these accounts have become more restrictive since regulations went into effect the beginning of the year. they're not as flexible as they once were, but there are still a lot of things you can do to spend that money. >> what advice do you have in terms of looking at your portfolio? year end, what do you want to have in mind in terms of retireme retirement? >> toupt tayou want to take a l your gains, your losses. you can take that loss against $3,000 against ordinary income,
but you might also want to consider taking some games off the table, too, maybe giving some games to your low-income kids, for example, if they're in those tax brackets. and charities would be happy to take your appreciated securities. you get to deduct the full market value and no capital gains. there are lots to think about this time of year. >> vera givens joining us. thank you. >> thank you, maria. news coming up this next week that will impact your money. what does it take these days? from 1% to 10%, americans have a differing opinion for what makes for a fat paycheck. back in a minute. opens its doors...
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for more on our show, check out our web site. i hope you'll follow me on twitter and google plus. look for maria bartiromo. a big week for housing data. tuesday we find out how many residential units began construction last month. that's with the release of housing starts data. on wednesday, the nation's realtors will report the number of existing homes sold in the month of november. and on thursday, the final reading of the third quarter gross domestic product will be out, typically a market mover. on friday we get data on new home sales for the last month. and finally today, what makes wealth? a recent gallup poll reported that a median income of $150,000 would be enough for most americans to feel rich.
23% of respondents would find comfort at 150k, but 15% said more than $1 million a year would do the trick. the census bureau puts median household income in the u.s. at about $50,000. age and gender divided the opinions. the median income women needed to be rich was just $100,000. young americans wanted more than those over 50 years old. that will do it for us today. thanks so much for joining us. my guest next week, producer harvey -dad, why are you getting that? -that's my cereal. is there a prize in there? oh, there's a prize, all right. is it a robot? no. is it a jet plane? nope. is it a dinosaur?] [ male announcer ] inside every box of heart healthy cheerios are those great tasting little o's made from carefully selected oats that c help lower cholesterol. stickers? uh-uh.